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Weekly Roberts Report

by 5m Editor
21 April 2010, at 5:27am

US - Agricultural US Commodity Market Report by Mike Roberts, Commodity Marketing Agent, Virginia Tech.

LEAN HOGS on the CME were up on Monday with the exception of the August contract. The MAY’10LH contract closed up $0.100/cwt at $86.525/cwt and $3.425/cwt higher than last report. AUG’10LH futures finished at $86.200/cwt; off $0.050/cwt. Good cash markets, lower feed input prices, and a good premium to the CME lean hog index were supportive. Processors are ponying up the cash for supplies amid profitable margins and improving exports. Cash hogs late last week were very strong, reaching 20-month highs. Cash hogs on Monday were $1-$1.5/cwt higher on strong packer demand. Profit-taking limited gains near the end of Monday’s session. USDA put the average pork price at $85.34/cwt, up $0.09/cwt and $5.83/cwt over last report. The CME lean hog index was placed at $77.72/lb; up $0.84/lb and $2.20/lb higher than this time last week. According to HedgersEdge.com, the average pork plant margin was raised $0.30/hd from last report to a positive $4.25/hd. This was based on the average buy of $59.75/cwt vs. the average breakeven price of $61.28/cwt.

CORN futures on the Chicago Board of Trade (CBOT) were off Monday. The MAY’10 contract closed at $3.476; down 16.25¢/bu and 0.75¢/bu lower than this time last week. DEC’10 corn futures closed down 16.25¢/bu at $3.780/bu and 2.75¢/bu down from last report. Good crop weather, a strong US dollar making US corn less attractive to importers, falling crude oil prices, and profit taking after last week’s run up in prices proved bearish. News that Goldman Sachs is being investigated for fraud and market manipulation drove them from an active role in commodities today. Goldman Sachs is a large commodity investor. Floor sources said traders expected USDA to show the US corn crop 19 per cent planted. USDA came through with that news in its 4:00 p.m. crop progress report. Exports were supportive. USDA placed corn-inspected-for-export at 37.699 mi bu vs. expectations for 30-35 mi bu. Losses were limited by reports that 230,000 tonnes (9.05 mi bu) of US corn had been sold today to South Korea and another unnamed buyer. Cash corn was steady to weaker amid slow farmer selling. Farmers are in the fields planting vs. selling grain. Funds sold 16,000 contracts trimming net short positions to 62,386 lots. Hopefully 70 per cent of the 2010 crop has been priced. It looks like seasonal price weakness may be have settled in.

SOYBEAN futures on the Chicago Board of Trade (CBOT) finished off on Monday. The MAY’10 soybean contract closed at $9.766¢/bu; down 9.5¢/bu but 16.75¢/bu more than last Monday. NOV’10 futures closed at $9.560/bu off 1.5¢/bu but 21.0¢/bu higher than last report. As with corn, similar bearish outside market influencers were noted. Soybeans appeared headed toward consolidation trading off last week’s gains amid no fresh fundamental news. Speaking of fundamentals, China put off some soybean purchases from the US to next year. China is sourcing more soybeans from South America as they become available. However, rains in the Brazil are slowing harvest while dry weather is aiding the Argentinean harvest. USDA announced Monday that China had cancelled a sizeable order of 165,000 tonnes (6.063 mi bu) of US soybeans. USDA put soybeans-inspected-for-export at 15.729 mi bu vs. expectations for 11-14 mi bu. Cash soybeans were steady to weaker in the US Midwest. Funds sold 6,000 contracts near the end of trading while going from a 11,568 net-bull position to a 17,418 net-bear position. Hopefully you have priced 70 per cent of the 2010 crop.

WHEAT futures in Chicago (CBOT) were lower on Monday. Pressure was put on prices as traders took profits off last week’s rally which was later held up by short-covering. MAY’10 futures closed at $4.676/bu; down 22.75¢/bu from Friday but even with this time last week. The JULY’10 wheat contract closed at $4.794/bu; off 23.00¢/bu from Friday’s close and 1.0¢/bu lower than a week ago. The same factors limiting corn and soybeans affected wheat. Exports were neutral with USDA placing wheat-inspected-for-export at 17.678 mi bu vs. estimates for 16-20 mi bu. Algeria tendered to buy 50,000 tonnes (1.84 mi bu); Russia is holding on to its wheat supply while Iran announced it had sold 2 mi tonnes (73.5 mi bu) to three Arab neighbors. Cash wheat in the US was steady-to-firm. Funds were bullish trimming net-bear positions by 4,400 contracts to 69,846 lots in short positions. Hopefully 70 per cent of the 2010 crop has been priced. If not, price on the rally.